Dell Technologies – An Enterprise Vendor in Full

By Charles King, Pund-IT, Inc. November 28, 2018

Does massive, ground-shifting change ever happen in an instant? Sure, at least enough to inspire songs, films and best-selling books. But more often, significant, fundamental changes require careful planning and steady, dedicated execution. It isn’t that love at first sight is a fiction – more that, along with a modicum of luck, reaching your Golden Wedding Anniversary requires a different sort of thought process and action.

The results of that approach to long term strategy were clear at Dell’s recent Analyst Summit in Chicago. The event and 200+ global analysts were a far cry from the modest analyst meeting Michael Dell hosted in 2007, a few months after he returned to Dell’s CEO position. At that time, his central pitch focused on “Dell 2.0” – a concept hinging on Dell’s planned transformation into an enterprise-class vendor of desktop-to-data center IT solutions.

The company arguably achieved that pinnacle with its blockbuster purchase of EMC just over two years ago but integrating so large and complex an acquisition takes time. Plus, it presents a greater question: Where does a fully-formed, fully-enabled Dell Technologies go from here? In Chicago, Michael Dell, his executive team and enthusiastic partners and customers, including Mastercard and Carnival, offered cogent answers and a clear vision of a future centered on Unlocking the Power of Data.

Dell 2.0

Looking back eleven years, the vision Michael Dell shared at that 2007 analyst event was remarkable for both its ambition and urgency. His company was then, after all, best known for its disruption of and leadership in PCs. In fact, it could be argued that the threat posed by Dell drove its primary competitor, HP, to pursue what was then the largest and, in retrospect, probably the most ill-advised acquisition in IT history – the purchase of Compaq.

In 2007, PCs still accounted for two thirds of Dell’s annual revenues but essential changes in personal computing devices, end user habits and retail processes increasingly threatened traditional PC vendors and their channels. Michael Dell clearly recognized these issues, along with the potential value of expanding the company’s existing relationships with business customers into a far broader portfolio of solutions and services.

Like other vendors, Dell’s plan focused on expanding its own organic product development efforts but also embraced two areas where the company was relatively inexperienced: strategic partnerships and corporate acquisitions. In the former case, Dell struck an intriguing deal with EMC in 2007 focused on cross-promoting the pair’s portfolios and customers. The company also embarked on a whirlwind of corporate acquisitions – over two dozen in the following decade, a stark contrast with the mere four deals it completed since its founding in 1985 (and the first of which occurred in 1999).

Not all of these efforts were successful. In fact, Dell’s decision to acquire iSCSI storage upstart EqualLogic in 2008 ended up scuttling its EMC partnership ahead of schedule. Plus, a few of what first seemed like promising deals, like the 2012 purchase of Quest Software, failed to catch fire. But most added substance to Dell’s offerings and substantially to its bottom line.

Some stumbles also led to fundamental, positive shifts in Dell’s go-to-market approach. For example, rather than attempting to press sales of its Quest-derived solutions on unwilling clients, Dell found a way forward by agnostically supporting the systems management and security software that customers preferred. A similar dynamic occurred after Dell halted a short-lived plan to deliver its own cloud platform and services, deciding instead to become an agnostic “broker” of others’ cloud solutions.

Dell today

So, what did I learn at the Dell Analyst Summit in Chicago? Quite a lot. First and foremost, senior executives from vice chairman of Products and Operations, Jeff Clarke, to president of Dell Capital, Scott Darling, emphasized the soundness of Dell’s financial position, innovation engine and its go-to-market strategies.

That’s important to note in relation to the overall success of the original Dell 2.0 strategy. In just over a decade, Dell’s reliance on low margin client (PC) solutions and sales has reduced dramatically, from more than two thirds of overall revenues to less than half.

That’s a crucial issue given the volatility of PC sales. Clarke highlighted Dell’s success in high value markets, including workstations (40.2% share) and displays (20.3% share), and its leadership in overall PC and gaming revenues. In other words, as PC sales have stabilized and improved, Dell has been well positioned to exploit growing opportunities. At the same time, the company has enjoyed 23 consecutive quarters of YoY share growth.

In addition, Clarke underscored Dell’s results in key, high-margin IT infrastructure solution classes. Those include #1 leadership (share) positions in all-Flash storage arrays (26.8%), external storage systems (29.2%), hyperconverged infrastructure (HCI) solutions (29.6%), x86 server units (19.7%) and mainstream server revenues (28.1%). Not too surprisingly, EMC products and assets (including the stake in VMware that came to Dell in the deal) play sizable roles in many of these areas.

More importantly, however, are the benefits those technologies should provide Dell as it moves toward solutions for digital, IT, workforce and security transformation that, as Michael Dell noted, process “exponentially more data at exponentially faster speeds.” In fact, the ability to help customers effectively add to and gain the full benefits from often massive stores of “data capital—an organization’s most valuable asset” is what Unlocking the Power of Data is all about.

IoT opportunities and challenges

A closer look at how Dell is pursuing that vision and strategy in the Internet of Things (IoT) was the subject of a half day of roundtable meetings on the Summit’s second day. Hosted by Joyce Mullen (president, Dell EMC’s Global Channel, OEM and IoT Solutions), Chris Wolff (head of Dell EMC’s Global OEM and IoT Partnerships and GTM) and Jason Shepherd (Dell Technologies IoT and Edge Computing CTO).

The trio’s areas of responsibility clearly reflected IoT’s opportunities and challenges. As Joyce Mullen noted, though Dell is making progress, broader recognition and markets are still developing. That’s partly because IoT vendors and solutions generally split between end user- and industry-focused offerings. Additionally, most IoT products are essentially transparent—working quietly in the background to collect, assess and transmit data for further analysis and action. Getting customers to understand and appreciate what they can’t easily see is anything but easy.

Mullen emphasized that her organization is clearly focused on industrial IoT (IIoT)—what she described as edge-to-core-to-multi-cloud—with Dell providing foundational solutions and services supporting partners’ IoT end points. For that reason, it’s entirely sensible that Dell’s IoT efforts reside in Mullen’s OEM organization. In fact, many of the company’s legions of OEM partners have long been involved in IoT-focused development. The raft of design, manufacturing, distribution, deployment, support and marketing services Dell created for its OEM customers easily translate to IoT.

Chris Wolff addressed go-to-market opportunities, including the challenges of working with customers who want clear assurances about the value and security of proposed solutions. It also doesn’t help that solutions often extend well-beyond traditional IT, meaning that multiple decision makers are involved in the purchasing process. Further, like many other still-developing markets, IoT is fraught with scores of complex often conflicting standards and interoperability challenges.

To overcome these points, Dell IoT focuses on a range of programs, such as its “Better Together” collaboration initiative since no one company can tackle IoT alone. It also organizes efforts according to the needs of specific IoT ecosystem participants, including technology makers, platform providers, future makers and OEMs. The company’s own solutions consist of IoT-connected bundles clients can install into their own solutions and IoT-optimized appliances ready for immediate deployment. While Dell is a “digital optimist” when it comes to IoT—and there’s a lot to be optimistic about—it is also proceeding pragmatically, playing the long game.

Jason Shepherd focused much of his presentation on technical aspects underlying IoT that also clearly affect customer interactions. Just as, “The Holy Grail of IoT is trust, the Holy Grail of digital transformation is selling data, services and resources to people you don’t know.” Creating an IoT foundation that is secure, scalable, extensible, manageable and easy to use helps to assure customers that they’ll receive full value from their investments. Focusing on those points, along with supporting and basing solutions on open technologies is how Dell intends to proceed.

The IoT session wrapped with a panel featuring representatives from Dell IoT’s partners and customers; VMware, Tridium and Software AG. The discussion focused on recently announced industrial IoT offerings, including a Dell Edge Gateway 3000 that leverages Tridium’s open Niagara Framework to analyze/activate data and improve outcomes, and Cumulocity IoT Edge by Software AG, a user-friendly edge of network appliance that prepares, filters and aggregates data before sending it to applications or the cloud.

Final analysis

Like other living things, businesses grow and evolve. All are nurtured by the forces and events around them but in some an elemental nature comes clearly through, reflecting the personalities and qualities of the organization’s leadership. Not surprisingly, that characteristic tends to be most emphatic in founder-led organizations, but it is seldom rigid or unyielding.

Instead, just as people change over time as experience tempers their hopes, aspirations and plans, many businesses follow similar evolutions. Those points were clear at Dell’s Analyst Summit, signifying a culmination of a journey that began in 2007. But that also marked a new beginning for a company that now fully exemplifies the enterprise character envisioned in Dell 2.0.

In Chicago, Michael Dell compared modern IT to Johannes Guttenberg’s printing press, “New ways of accessing and exchanging information lead to massive changes and disruption.” That was true in the 15th century and it remains true today and applies to people and organizations of every sort.

Recognizing and acting on that point, helping customers and partners use information to improve their products, processes and services, remains central to Dell’s character and provides light for the way ahead. Though the Chicago Summit was organized around “Unlocking the Power of Data,” it could well have been subtitled, “By unlocking the power of Dell.”